OZONE LAYER

EPA's planned phaseout of harmful refrigerant hits snag

Gabriel Nelson, E&E reporter

Greenwire: Wednesday, August 17, 2011

Eighteen months after the Obama administration came out with new rules to stop refrigerants in air conditioners from thinning the Earth's protective ozone layer, an unexpected quirk has divided the industry and could have implications for the atmosphere.

Much of the equipment being installed in American homes is still getting its cooling power from an ozone-depleting gas that was supposed to be phased out, says a group of disgruntled appliance makers, including the makers of Carrier and Trane air conditioners.

Five companies wrote a letter to EPA Administrator Lisa Jackson this week saying the agency inadvertently left a loophole in a 2009 rule to enforce the Montreal Protocol, a 1989 treaty crafted to repair the hole in the ozone layer.

The treaty requires the United States to cut its consumption of hydrochlorofluorocarbon-22, or HCFC-22, a refrigerant widely used in air conditioners for decades, by 90 percent from baseline levels by 2015 and eliminate its use entirely by 2030. That means all air conditioners will eventually need to stop using the refrigerant, also known as R-22, in favor of another gas called R-410A.

But after the rules came out in late 2009, a few companies realized they could make the old models "dry" -- meaning the refrigerant is not included -- and market them as a lower-cost option for homeowners and businesses with broken air conditioning systems.

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Despite the EPA rules, air conditioning units that need HCFC-22 now make up 10 to 20 percent of all sales, according to industry estimates. Just about everyone is making the R-22 air conditioners again and selling them dry under the pressure of market forces.

"We had planned all along for these to go away," said Francis Dietz, vice president of public affairs at the Air Conditioning, Heating, and Refrigeration Institute. "Manufacturers had planned it that way by shutting down their lines, but now they're all back up, and it's caused a whole bunch of turmoil. They don't even want to build these units, but they feel that they have to."

Dietz's trade group, which speaks for the industry, has also asked EPA to stop companies from manufacturing the old models. And while the Obama administration is thinking about how to respond, there has been a skirmish over market share, pitting appliance makers that would make money on the new models against those that hang their hat on selling the old ones.

Leading the frustrated companies is Carrier, which says it prepared for the new rules by investing heavily in the new air conditioner models, and has already sold more than 3 million of them. The company, a division of Hartford, Conn.-based United Technologies Corp., filed a petition earlier this year asking EPA to close what Carrier describes as a loophole.

Air conditioners do not release any refrigerant into the atmosphere unless they are broken, but industry experts concede that a small amount can leak during repairs.

If the administration does not act, more of the older air conditioners will be sold, which will cause more ozone-depleting chemicals to be released into the atmosphere over the years, Carrier and its allies argue.

"There can only be one result: our nation's reliance on HCFC-22 will continue and the transition to newer, more efficient and environmentally preferable alternatives will be delayed," the group said in its letter to EPA this week.

Other companies disagree with the claim that EPA left a loophole. Karen Meyers, corporate director of government relations at Rheem Manufacturing Co., said the rules mean homeowners and businesses can get replacement parts rather than rebuild their entire air conditioning systems.

Meyers said the key to the phaseout will be the agency's annual budget for refrigerants, which decides how much R-22 will be available on the market. That was what worked when a previous refrigerant used in air conditioners, R-12, was phased out in the 1970s and '80s because it was worse than R-22 for the ozone layer, she said.

"If you reduce the amount of refrigerant available, you tighten the supply, which will affect pricing and then affect consumers' buying decisions," Meyers said. "We don't think that EPA should focus on regulating what product can be made."

When it released its new rules in 2009, EPA said banning the sale of R-22 in new air conditioners and other appliances would cut emissions of ozone-depleting gases by 4,070 tons over a decade, roughly a tenth of what the United States is allowed to release under the Montreal Protocol. That would help the ozone layer recover, the agency said, shielding the planet from harmful ultraviolet rays and preventing an estimated 1,700 cases of skin cancer.

Tougher times, cheaper repairs

The new rules say that all brand-new air conditioning systems need to use the new refrigerant. But the majority of the existing air conditioners in American homes use R-22, and in those cases, things get tricky.

Under the new EPA rules, the old refrigerant cannot be sold in a new condenser unit -- the main piece of a central air system, which is usually installed alongside a house. But the condensers can be sold containing an inert gas such as nitrogen and filled with R-22 later.

The goal was to let homeowners or businesses with broken condensers buy a replacement rather than swap out their entire system to work well with the new refrigerant. Air conditioners that use R-410A save money on electricity bills because they are more energy-efficient. But they cost more up front, tempting people who cannot afford a full replacement.

No one has been able to resist making the R-22 air conditioners again -- not even Carrier, which decided it was necessary to stay competitive, said John Mandyck, the company's chief sustainability officer.

"We realized that the market was moving faster than the government could react," Mandyck said in an interview.

As the company has pressured EPA, it has called out its rivals by name, saying they have aggressively marketed the old air conditioners and stymied the transition away from ozone-depleting gases.

Among the companies named in Carrier's petition were Houston-based Goodman Manufacturing Co. and Nordyne International Inc., the Missouri-based maker of Maytag appliances. In a statement to Greenwire, Nordyne said Carrier's petition reflects concerns about a competitive disadvantage, not about the environment, because other companies are better positioned to sell R-22 air conditioners.

Rex Anderson, a spokesman for Goodman, said he agrees that R-410A is the refrigerant of the future, but the company had to react to the forces of the market. Goodman will do whatever EPA tells it to do, he said.

"If they tell us tomorrow, 'Don't make any uncharged units,' we won't make them," Anderson said.

After several telephone conversations and email messages over two days, an EPA spokeswoman failed to respond to questions by deadline.